What happens if my LLC doesn’t have insurance and gets sued?

Without insurance, the business would typically need to pay for legal defense and any settlement or judgment out of its own assets and income, which can be significant even for a claim that is ultimately resolved in the business’s favor.

Do all LLCs need the same type of insurance?

No. The right coverage depends on what the business does. A photographer, a cleaning company, and a consultant are likely to consider different types of coverage based on their specific operations.

Does an LLC Need Insurance?

Forming an LLC is a common first step for new business owners, and it's reasonable to wonder whether that step alone is enough. Here's a direct answer, plus how to figure out what applies to your business.

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Short answer: an LLC doesn't come with insurance

Forming an LLC creates a legal entity and can provide certain separation between your personal assets and specific business liabilities. It does not automatically insure your business against claims, accidents, or losses. Whether you need insurance — and what kind — is a separate decision based on how your business actually operates.

Situations where LLC owners commonly look into insurance

You interact with customers or the public. Any in-person interaction creates some chance of an injury or property damage claim.
You work on other people's property. Cleaning, landscaping, and handyman businesses in particular face this exposure regularly.
You give professional advice or perform a service. A client could allege your work caused them a loss, even if you did nothing wrong.
A client, landlord, or platform requires proof of insurance. This is one of the most common triggers — many contracts won't proceed without a certificate of insurance.
You have employees. Many states require workers' compensation coverage once you hire staff.
You own business property or equipment. Tools, computers, and inventory generally aren't protected by the LLC structure itself.

What the LLC structure does and doesn't do

LLCs can provide certain legal separation between a business and its owners, which is one reason the structure is popular with small business owners. But that protection has limits, depends on the circumstances and applicable state law, and can be reduced by things like commingling personal and business funds or personally guaranteeing a business debt. It also does nothing to pay for a claim once one is made — that's the role insurance plays. For more on this distinction, see LLC liability insurance explained.

How to figure out what your LLC actually needs

Rather than guessing, the most direct approach is to answer a few questions about your business — what it does, where it operates, whether you have employees — and review the coverage options that are actually relevant. This takes a few minutes and doesn't require a phone call.

Related reading: General liability insurance for LLC, single-member LLC insurance, and the full FAQ.

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